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On 21 December 2018, Parker J of the New South Wales Supreme Court dismissed proceedings brought against MetLife Insurance Ltd (MetLife) and First State Super (FSS) by Ms Bronwyn Sargeant for a total permanent disability (TPD) benefit. Parker J found that MetLife did not breach its duties in handling the claim, therefore, the court did not consider whether Ms Sargeant was a TPD beneficiary.
The judgment usefully considers issues relevant to claims handling.
The proceedings concerned the now 46 year old plaintiff, Ms Sargeant, is a former officer of the New South Wales Police Force, who was discharged from her role on medical grounds in April 2011.
The chronology of events was:
The relevant definition required six consecutive months absence from work and proof to MetLife’s satisfaction that the Member was incapacitated to such an extent that they were ‘unlikely ever’ to engage in any gainful profession, trade or occupation for which they were reasonably qualified by education, training or experience.
The only issue determined was whether MetLife had breached its duties in considering and determining the claim by 3 September 2015 (the date the Statement of Claim was filed) or, at the latest, by 12 months from that date (3 September 2016). For reasons that are not explained in the judgment (but which we discuss later in this article), the plaintiff did not seek to preserve an entitlement to challenge MetLife’s claim declinature of May 2018.
Parker J reinforced the two stage approach which required Ms Sargeant to first demonstrate that MetLife’s failure to be so satisfied resulted from a breach of its obligation as insurer, and secondly, whether the conditions of the policy were in fact satisfied.
It was agreed by the parties that disablement was to be assessed as at the end of the six month period of absence from work.
MetLife conceded at trial that Ms Sargeant had a diagnosis of piriformis syndrome, depression and Post Traumatic Stress Disorder (PTSD), but maintained that she was not entitled to the TPD benefit as there was a divergence of medical opinion regarding the extent of disablement, for example:
In considering MetLife’s delay, Parker J referred to the cases of Shuetrim and Hellessey v MetLife Insurance Ltd  NSWSC 1284 (Hellessey), where the court indicated the importance of not just looking at the length of the delay, but, more importantly, considering the reasons for an insurer’s delay.
In finding that MetLife had not breached its duties, Parker J referred to the following factors:
And I do not think it was unreasonable for MetLife to fail to make a formal determination of the claim while the proceedings were continuing and there was no request for it to do so.
Insurers frequently face a situation where a plaintiff serves material for use in litigation and, if TPD has not yet been determined, it is unclear whether the same material should be used for assessment of the claim. However, material served in the proceedings (and documents produced on subpoena) should not be used for TPD claims assessment, as case law provides that documents obtained on discovery or subpoena in legal proceedings, and statements served for the purposes of legal proceedings may be used only for the purpose of those proceedings (Hearne v Street (2008) 235 CLR 125, as discussed in paragraph 96 of the Judgment). For such material to be used to determine TPD, the court’s leave must be obtained.
In Sargeant, Parker J considered that a plaintiff could provide clarity regarding the purpose for which material should be used as follows:
Further information / assistance regarding the issues raised in this article is available from the authors, Catherine McAdam, Partner, and Dilani Patrick, Lawyer, or your usual contact at Moray & Agnew.